The Australian dollar consolidated above the 74 cent level in overnight trade, benefiting from renewed strength in commodity prices during Monday’s trading session.
According to Rodrigo Catril, currency strategist at the National Australia Bank, the Aussie received a boost from news that Saudi Arabia and Russia had agreed to extend cuts to crude oil production levels until the end of March next year.
“It all started yesterday around midday with the release of a joint statement from the energy ministers of Saudi Arabia and Russia concluding that the current production cuts agreement should be extended until Q1 2018. WTI and Brent jumped over 1.5% on the news and then continued to rally for most of the overnight session gaining over 3% at one point,” he said.
“The news has helped commodity linked currencies outperform.”
Along with the boost provided by the surge in crude prices, the Aussie also benefited from soft US economic data with the New York Fed’s closely-watched Empire State manufacturing index falling to the lowest level since October 2016 in May.
Here’s the Aussie dollar scoreboard as at 7.55am AEST.
AUD/USD 0.7412 , 0 , 0.00%
AUD/JPY 84.17 , -0.16 , -0.19%
AUD/CNH 5.1065 , -0.0007 , -0.01%
AUD/EUR 0.6752 , 0 , 0.00%
AUD/GBP 0.5747 , -0.0001 , -0.02%
AUD/NZD 1.0769 , 0.0004 , 0.04%
And here’s the AUD/USD 5-minute chart showing the Aussie’s surge back above the 74 cent level in early European trade on Monday.
Turning to Tuesday trade in Asia, there’s little on the economic radar that appears likely to move the Aussie, including the release of the minutes of the RBA’s May monetary policy meeting.
“Given the Minutes pre-date the Statement on Monetary Policy and follow up speech from RBA Governor Lowe we are doubtful they will shed more light on the current RBA thinking,” says Catril.
Outside of the RBA minutes, the weekly ANZ-Roy Morgan Australian consumer confidence index, along with Australian new car sales for April, will also be released.
Neither will generate volatility in the Aussie.
Given the relatively quiet data calendar, it’s likely that movements in crude futures, US treasury yields and in the USD/JPY will be influential on those in the Aussie.
Later in the session, markets will receive UK CPI, the second release of Eurozone Q1 GDP, German ZEW survey along with housing starts, building permits and industrial output figures from the US.